Jerome Powell Threatens to Trigger a Stock Market Crash on April 3


Jerome Powell - Jerome Powell Threatens to Trigger a Stock Market Crash on April 3

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Federal Reserve Chair Jerome Powell has yet another upcoming speech coming this Wednesday, April 3. Just days after suggesting rate cuts may not come until later in the year, Powell is taking the podium once again ahead of the crucial March jobs data due this Friday.

What should you expect this time around?

Well, if history is any indicator, likely more of the same. Indeed, Powell has generally worn a fairly neutral demeanor this year, maintaining expectations for rate cuts to come while conceding that the state of the economy warrants rates to stay higher for longer.

Last week, Powell affirmed expectations that the central bank will cut rates but pushed back on notions that the Fed is comfortable with inflation where it is.

“No, it doesn’t mean that,” said Powell. “We did mark up our growth forecast, and so have many other forecasters, so the economy is performing well, and the inflation data came in a little bit higher as a separate matter and I think that caused people to write up their inflation [projections].”

Consumer prices climbed 2.5% in February, per the Fed-preferred Personal Consumption Expenditures (PCE) report released last week. This was slightly higher than January’s 2.4% inflation reading, hinting that the final leg in the war on inflation may be more difficult than investors hoped.

Jerome Powell May Weigh on Stocks as Equities Slide

So far, equity markets have responded poorly to Powell’s statements last week. Indeed, most major indices have fallen on the first two trading sessions in the new week, the first days of the second quarter.

The S&P 500 and Nasdaq Composite have lost 1% and 1.3%, respectively, so far this week. Depending on the tone Jerome Powell adopts tomorrow, it could help slow down the losses or give cause for continued bearish sentiment going forward.

“We’re strongly committed to bringing inflation down to 2% over time,” Powell added. “Markets believe we will achieve that goal and they should believe that because that’s what will happen over time.”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.



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2024-04-02 21:40:48

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